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TREASURY/IRS AND OMB USE ONLY DRAFT
2025
Instructions for Schedule J
(Form 1040)
Income Averaging for Individuals With Income from Farming or Fishing
Section references are to the Internal Revenue
Code unless otherwise noted.
2023, and 2024 to figure your tax on
Schedule J.
Future Developments
If you need copies of your tax returns,
use Form 4506. There is a fee for each
return requested. See Form 4506 for the
fee amount. If your main home, principal
place of business, or tax records are
located in a federally declared disaster
area, this fee will be waived. If you want a
free transcript of your tax return or
account, use Form 4506-T. See the
Instructions for Form 1040 to find out how
to get these forms.
For the latest information about
developments related to Schedule J (Form
1040) and its instructions, such as
legislation enacted after they were
published, go to IRS.gov/ScheduleJ.
Excess business loss limitation. The
limitation on excess business losses for
noncorporate taxpayers has been made
permanent.
Reminder
Schedule J (Form 1040) title changed.
The title for Schedule J (Form 1040) was
changed from “Income Averaging For
Farmers and Fishermen” to “Income
Averaging for Individuals With Income
from Farming or Fishing.”
General Instructions
Use Schedule J (Form 1040) to elect to
figure your 2025 income tax by averaging,
over the previous 3 years (base years), all
or part of your 2025 taxable income from
your trade or business of farming or
fishing. This election may give you a lower
tax if your 2025 income from farming or
fishing is high and your taxable income for
1 or more of the 3 prior years was low.
In order to qualify for this election, you
aren’t required to have been in the
business of farming or fishing during any
of the base years.
You may elect to average farming or
fishing income even if your filing status
wasn’t the same in the election year and
the base years.
This election doesn’t apply when figuring
your alternative minimum tax on Form
6251. Also, you don’t have to refigure,
because of this election, the tax liability of
any minor child who was required to use
your tax rates in the prior years.
Prior Year Tax Returns
You may need copies of your original or
amended income tax returns for 2022,
Nov 19, 2025
Keep a copy of your 2025 income tax
return to use for income averaging in
2026, 2027, or 2028.
Note: For tax years beginning in 2022,
the filing status “Qualifying widow(er)” is
called “Qualifying surviving spouse.” The
rules for the filing status have not
changed. The same rules that applied for
Qualifying widow(er) apply to Qualifying
surviving spouse. We will match the term
to the year of use throughout these
instructions.
Definitions
Farming business. A farming business is
the trade or business of cultivating land or
raising or harvesting any agricultural or
horticultural commodity. This includes:
1. Operating a nursery or sod farm;
2. Raising or harvesting of trees
bearing fruits, nuts, or other crops;
3. Raising ornamental trees (but not
evergreen trees that are more than 6 years
old when severed from the roots);
4. Raising, shearing, feeding, caring
for, training, and managing animals; and
5. Leasing land to a tenant engaged in
a farming business but only if the lease
payments are (a) based on a share of the
tenant’s production (not a fixed amount)
and (b) determined under a written
agreement entered into before the tenant
begins significant activities on the land.
A farming business doesn’t include:
• Contract harvesting of an agricultural or
horticultural commodity grown or raised by
someone else, or
• Merely buying or reselling plants or
animals grown or raised by someone else.
Fishing business. A fishing business is
the trade or business of fishing in which
The word “fish” means finfish, mollusks,
crustaceans, and all other forms of marine
animal and plant life other than marine
mammals and birds.
A fishing business doesn’t include any
scientific research activity conducted by a
scientific research vessel.
Additional Information
See Pub. 225 and Regulations section
1.1301-1 for more information.
Specific Instructions
Line 2a
Elected Farm Income
To figure your elected farm income, first
figure your taxable income from farming or
fishing. This includes all income, gains,
losses, and deductions attributable to your
farming or fishing business. If you conduct
both farming and fishing businesses, you
must figure your elected farm income by
Instructions for Schedule J (Form 1040) (2025) Catalog Number 25514J
Department of the Treasury Internal Revenue Service www.irs.gov
DRAFT
DRAFT
What’s New
the fish harvested, either in whole or in
part, are intended to enter commerce or
enter commerce through sale, barter, or
trade. This includes:
1. The catching, taking, or harvesting
of fish;
2. The attempted catching, taking, or
harvesting of fish;
3. Any other activity that can
reasonably be expected to result in the
catching, taking, or harvesting of fish;
4. Any operations at sea in support of
or in preparation for any activity described
in (1) through (3) above;
5. Leasing a fishing vessel, but only if
the lease payments are (a) based on a
share of the catch (or a share of the
proceeds from the sale of the catch) from
the lessee’s use of the vessel in a fishing
business (not a fixed payment), and (b)
determined under a written lease entered
into before the lessee begins any
significant fishing activities resulting in the
catch; and
6. Compensation as a crew member
on a vessel engaged in a fishing business,
but only if the compensation is based on a
share of the catch (or a share of the
proceeds from the sale of the catch).
TREASURY/IRS AND OMB USE ONLY DRAFT
combining income, gains, losses, and
deductions attributable to your farming
and fishing businesses.
Elected farm income also includes any
gain or loss from the sale or other
disposition of property regularly used in
your farming or fishing business for a
substantial period of time. However, if
such gain or loss is realized after
cessation of the farming or fishing
business, the gain or loss is treated as
attributable to a farming or fishing
business only if the property is sold within
a reasonable time after cessation of the
farming or fishing business. A sale or other
disposition within 1 year of the cessation is
presumed to be within a reasonable time.
You should find your income, gains,
losses, and deductions from farming or
fishing reported on different tax forms,
such as:
• 2025 Form 1040 or 1040-SR, or Form
1040-NR, line 1a, income from wages and
other compensation you received (a) as a
shareholder in an S corporation engaged
in a farming or fishing business, or (b) as a
crew member on a vessel engaged in a
fishing business (but see Fishing
business, earlier);
• 2025 Schedule 1 (Form 1040), line 15,
deductible part of self-employment tax,
but only to the extent that deduction is
attributable to your farming or fishing
business;
• 2025 Form 1040, 1040-SR, or
1040-NR, line 15, CCF reduction, except
to the extent that any earnings (without
regard to the carryback of any net
operating or net capital loss) from the
operation of agreement vessels in the
fisheries of the United States or in the
foreign or domestic commerce of the
United States aren’t attributable to your
fishing business;
• Schedule C;
• Schedule D;
• Schedule E, Part II;
• Schedule F;
• Form 4797;
• Form 4835;
• Form 8903, Domestic Production
Activities Deduction, but only to the extent
that deduction is attributable to your
farming or fishing business; and
• Form 8949.
Your elected farm income is the amount
of your taxable income from farming or
fishing that you elect to include on line 2a.
You don’t have to include all of
TIP your taxable income from farming
or fishing on line 2a. It may be to
your advantage to include less than the
2
The excess farm loss limitation rules
don’t apply for tax years beginning after
2017. The excess farm loss limitation rules
are suspended for tax years beginning
after 2017 and replaced by the excess
business loss limitation rules for tax years
beginning after 2020. The at-risk limits and
the passive activity limits are applied
before calculating the amount of any
excess business loss. The amount of any
excess business loss allocable to your
farming or fishing business(es) is not used
in calculating the amount of your elected
farm income. See generally the
Instructions for Schedule F (Form 1040)
and Form 461.
Your elected farm income can’t exceed
your taxable income.
Lines 2b and 2c
Complete lines 2b and 2c if the amount of
your elected farm income on line 2a
includes net capital gain. Net capital gain
is the excess, if any, of net long-term
capital gain over net short-term capital
loss.
Line 2b. Enter on line 2b the portion of
your elected farm income on line 2a
treated as a net capital gain. The amount
you enter on line 2b can’t exceed the
smaller of your total net capital gain or the
net capital gain attributable to your farming
or fishing business.
Line 2c. Enter on line 2c the smaller of
line 2b or the unrecaptured section 1250
gain attributable to your farming or fishing
business, if any.
Line 4
Figure the tax on the amount on line 3
using:
• The 2025 Tax Table, Tax Computation
Worksheet, or Qualified Dividends and
Capital Gain Tax Worksheet from the 2025
Instructions for Form 1040 or the 2025
Instructions for Form 1040-NR;
• The 2025 Foreign Earned Income Tax
Worksheet from the 2025 Instructions for
Form 1040; or
• The Schedule D Tax Worksheet in the
2025 Instructions for Schedule D.
Enter the tax on line 4.
Line 5
If you used Schedule J to figure your tax
for:
• 2024 (that is, you entered the amount
from the 2024 Schedule J, line 23, on your
2024 Form 1040, Form 1040-SR, or Form
1040-NR, line 16; or on your 2024 Form
1040-X, line 6), enter on line 5 the amount
from your 2024 Schedule J, line 11;
• 2023 but not 2024, enter on line 5 the
amount from your 2023 Schedule J,
line 15; or
• 2022 but not 2023 or 2024, enter on
line 5 the amount from your 2022
Schedule J, line 3.
If you figured your tax for 2022, 2023,
and 2024 without using Schedule J, enter
on line 5 the taxable income from your
2022 tax return (or as previously adjusted
by the IRS, or corrected on an amended
return). But if that amount is zero or less,
complete the 2022 Taxable Income
Worksheet to figure the amount to enter on
line 5.
If you didn’t file a tax return for 2022,
use the amount you would have reported
as your taxable income had you been
required to file a tax return. Be sure to
keep all your records for 2022 for at least 3
years after April 15, 2026 (or the date you
file your 2025 tax return, if later).
Instructions for 2022 Taxable
Income Worksheet
Line 2. Any net capital loss deduction on
your 2022 Schedule D, line 21, isn’t
allowed for income averaging purposes to
the extent it didn’t reduce your capital loss
carryover to 2023. This could happen if the
taxable income—shown on your 2022
Form 1040, line 15, or your 2022 Form
1040-NR, line 15 (or as previously
adjusted)—was less than zero. Enter on
line 2 the amount by which your 2022
capital loss carryover to 2023 (the sum of
your short- and long-term capital loss
carryovers) exceeds the excess of the loss
on your 2022 Schedule D, line 16, over the
loss on your 2022 Schedule D, line 21. If
you had any net operating loss (NOL)
carrybacks to 2022, be sure you refigured
your 2022 capital loss carryover to 2023.
Line 3. If you had an NOL for 2022, enter
the amount of that NOL from the 2022
Form 1045, Schedule A, line 24, you filed
with Form 1045 or Form 1040X. If you
didn’t have an NOL for 2022, enter the
portion, if any, of the NOL carryovers and
carrybacks to 2022 that weren’t used in
2022 and were carried to years after 2022.
Example. A farmer, who is single,
didn’t use income averaging for 2022,
2023, or 2024. For 2025, the farmer has
$18,000 of elected farm income on
Schedule J, line 2a. The taxable income
on the farmer’s 2022 Form 1040, line 15, is
$850. However, the farmer had a $13,950
NOL for 2023, $9,000 of which was
remaining to carry to 2022 after the NOL
was carried back to 2021. To complete
line 1 of the 2022 Taxable Income
Worksheet, the farmer combines the
$9,000 NOL carryover with the $850 from
the farmer’s 2022 Form 1040, line 15. The
DRAFT
DRAFT
Elected farm income doesn’t include
income, gain, or loss from the sale or other
disposition of land or from the sale of
development rights, grazing rights, and
other similar rights.
entire amount, depending on how the
amount you include on line 2a affects your
tax bracket for the current and prior 3 tax
years.
TREASURY/IRS AND OMB USE ONLY DRAFT
2022 Taxable Income Worksheet—Line 5
Keep for Your Records
Complete this worksheet if you didn’t use Schedule J to figure your tax for 2023 and 2024 and your 2022 taxable income
was zero or less. See the instructions for line 5 before completing this worksheet.
1. Figure the taxable income from your 2022 tax return (or as previously adjusted) without limiting it
to zero. If you had an NOL for 2022, don’t include any NOL carryovers or carrybacks to 2022.
Enter the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2022 Schedule D, line 21, add that loss (as a positive
amount) and your 2022 capital loss carryover to 2023. Subtract from that sum
the amount of the loss on your 2022 Schedule D, line 16, and enter the
result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
3. If you had an NOL for 2022, enter it as a positive amount. Otherwise, enter as
a positive amount the portion, if any, of the NOL carryovers and carrybacks to
2022 that weren’t used in 2022 and were carried to years after 2022 . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
result is a negative $8,150, the farmer’s
2022 taxable income, which the farmer
enters as a positive amount on line 1 of
the 2022 Taxable Income Worksheet.
When the farmer filed the 2022 tax
return, the farmer had a $3,000 net capital
loss deduction on Schedule D, line 21
(which was also entered on Form 1040,
line 7); a $7,000 loss on Schedule D,
line 16; and a $4,000 capital loss
carryover to 2024. However, when the
farmer carried back the 2023 NOL ($9,000
of which was carried to 2022), the farmer
refigured the 2021 capital loss carryover to
2022 as $7,000. The farmer adds the
$3,000 from Schedule D, line 21, and the
$7,000 capital loss carryover. The farmer
subtracts from the $10,000 result the
$7,000 loss on the Schedule D, line 16,
and enters $3,000 on line 2 of the
worksheet.
The farmer had $850 of taxable income
in 2022 that reduced the 2023 NOL
carryback. The $3,000 net capital loss
deduction reduced the amount of the 2023
NOL carryback. As a result, only $5,150
($9,000 – $850 – $3,000 = $5,150) was
available to carry to 2024 and later years,
as shown on the farmer’s 2023 Form 1045,
Schedule B, line 10. The farmer enters the
$5,150 on line 3 of the worksheet, and
$8,150 ($5,150 plus the $3,000 line 2
amount) on line 4. The farmer then
subtracts the $8,150 from the $8,150 on
line 1 and enters the result, $0, on line 5 of
the worksheet. The farmer enters a $0 on
Schedule J, line 5. The farmer combines
that amount with the $6,000 on
Schedule J, line 6, and enters $6,000 on
Schedule J, line 7.
Line 8
If line 7 is zero, enter -0- on line 8.
Otherwise, figure the tax on the amount on
line 7 using:
• The 2022 Tax Rate Schedules below;
• The 2022 Qualified Dividends and
Capital Gain Tax Worksheet, later;
4.
5.
• The 2022 Schedule D Tax Worksheet in
the 2022 Schedule D instructions (but use
the 2022 Tax Rate Schedules below when
figuring the tax on lines 34 and 36 of the
Schedule D Tax Worksheet); or
• The 2022 Foreign Earned Income Tax
Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2022
Schedule D Tax Worksheet to figure the
tax on the amount on line 7. However, if
you filed Form 2555 for 2022, you must
first complete the 2022 Foreign Earned
Income Tax Worksheet, and then use the
2022 Schedule D Tax Worksheet to figure
the tax on the amount on line 3 of the
Foreign Earned Income Tax Worksheet.
When completing the Schedule D Tax
Worksheet, you must allocate 1/3 of the
amount on Schedule J, line 2b, (and 1/3 of
the amount on line 2c, if any) to 2022. If for
2022 you had a capital loss that resulted in
a capital loss carryover to 2023, don’t
reduce the elected farm income allocated
to 2022 by any part of the carryover.
3
DRAFT
DRAFT
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 . . . . . . . .
1.
TREASURY/IRS AND OMB USE ONLY DRAFT
2022 Tax Rate Schedules—Line 8
Schedule Y-2—Use if your 2022 filing status was Married filing
separately.
Schedule X—Use if your 2022 filing status was Single.
If
Schedule J,
line 7, is:
Over—
But not
over—
$0 $10,275
10,275
41,775
41,775
89,075
Enter on
Schedule J,
line 8
...........
of the
amount
over—
10%
$0
$1,027.50 +
12%
10,275
10,275
41,775
$0 $10,275
4,807.50
89,075
...........
of the
amount over
—
10%
$0
$1,027.50 +
12%
10,275
4,807.50
+
22%
41,775
41,775
+
22%
41,775
15,213.50 +
24%
89,075
89,075 170,050
15,213.50 +
24%
89,075
170,050 215,950
34,647.50 +
32%
170,050
170,050 215,950
34,647.50 +
32%
170,050
215,950 539,900
49,335.50 +
35%
215,950
215,950 323,925
49,335.50 +
35%
215,950
37%
539,900
323,925
87,126.75 +
37%
323,925
162,718
+
Schedule Y-1—Use if your 2022 filing status was Married
filing jointly or Qualifying widow(er).
If
Schedule J,
line 7, is:
Over—
But not
over—
$0 $20,550
20,550
Enter on
Schedule J,
line 8
...........
..........
Schedule Z—Use if your 2022 filing status was Head of
household.
of the
amount
over—
10%
$0
If
Schedule J,
line 7, is:
Over—
But not
over—
$0 $14,650
Enter on
Schedule J,
line 8
...........
of the
amount over
—
10%
$0
83,550
$2,055
+
12%
20,550
14,650
55,900
$1,465.00 +
12%
14,650
83,550 178,150
9,615
+
22%
83,550
55,900
89,050
6,415.00
+
22%
55,900
178,150 340,100
30,427
+
24%
178,150
89,050 170,050
13,708.00 +
24%
89,050
340,100 431,900
69,295
+
32%
340,100
170,050 215,950
33,148.00 +
32%
170,050
431,900 647,850
98,671
+
35%
431,900
215,950 539,900
47,836.00 +
35%
215,950
174,253.50 +
37%
647,850
539,900
161,218.50 +
37%
539,900
647,850
............
...........
DRAFT
DRAFT
But not
over—
Enter on
Schedule J,
line 8
89,075 170,050
539,900 .............
4
If
Schedule J,
line 7, is:
Over—
TREASURY/IRS AND OMB USE ONLY DRAFT
2022 Qualified Dividends and Capital Gain Tax Worksheet—Line 8
Keep for Your Records
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2025 Schedule J, line 2a, doesn’t include any net capital gain.
• You (a) entered qualified dividends on your 2022 Form 1040, line 3a, or 2021 Form 1040-NR, line 3a; (b) entered capital gain
distributions directly on your 2022 Form 1040, line 7, or your 2022 Form 1040-NR, line 7, and weren’t required to file Schedule D; or (c)
filed Schedule D in 2022 and you answered “Yes” on lines 17 and 20 of that Schedule D.
1.
2.
3.
4.
5.
6.
7.
9.
10.
11.
12.
13.
14.
15.
Amount, if any, from your 2022 Form 4952, line 4g . . . . . . . . . . . . 5.
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Enter one of the following three amounts depending on your
filing status.
• $41,675 if single or married filing separately.
. . . . . . . . . . 8.
• $83,350 if married filing jointly or qualifying widow(er).
• $55,800 if head of household.
Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
DRAFT
DRAFT
8.
Amount from your 2025 Schedule J, line 7. If for 2022 you filed Form 2555, enter the
amount from line 3 of the 2022 Foreign Earned Income Tax Worksheet . . . . . . . . . . . 1.
Amount from your 2022 Form 1040, line 3a* (or your 2022 Form
1040-NR, line 3a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2022?*
Enter the smaller of line 15 or 16 of your 2022
Yes. Schedule D, but don’t enter less than -0-.
. . . . 3.
.
Enter the amount from your 2022 Form 1040,
No. line 7, or 2022 Form 1040-NR, line 7.
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . 11.
Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
16.
Enter one of the following amounts depending on your filing status.
• $459,750 if single.
. . . . . . . . . . 15.
• $258,600 if married filing separately.
• $517,200 if married filing jointly or qualifying widow(er).
• $488,500 if head of household.
Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
17.
Add lines 7 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18.
Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19.
Enter the smaller of line 14 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
20.
Multiply line 19 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
21.
Add lines 11 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
22.
Subtract line 21 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
23.
Multiply line 22 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
24.
Figure the tax on the amount on line 7. Use the 2022 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
25.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
26.
Figure the tax on the amount on line 1. Use the 2022 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
27.
Tax. Enter the smaller of line 25 or line 26 here and on your 2025 Schedule J, line 8. If for 2022 you filed
Form 2555, don’t enter this amount on Schedule J, line 8. Instead, enter it on line 4 of the 2022 Foreign
Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
* If for 2022 you filed Form 2555, see the footnote in the 2022 Foreign Earned Income Tax Worksheet before completing this line.
5
TREASURY/IRS AND OMB USE ONLY DRAFT
2022 Foreign Earned Income Tax Worksheet—Line 8
Keep for Your Records
Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2022 Form 1040
using Form 2555. However, if Schedule J, line 7, is zero or less, don’t complete this worksheet.
1. Enter the amount from your 2025 Schedule J, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2a. Enter the amount from your (and your spouse’s, if filing jointly) 2022 Form 2555, lines 45 and
50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a.
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2022
because they were related to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b.
c. Subtract line 2b from line 2a. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c.
3. Add lines 1 and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
* Enter the amount from line 3 above on line 1 of the 2022 Qualified Dividends and Capital Gain Tax Worksheet or the 2022
Schedule D Tax Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that
worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain
excess. To find out if you had a capital gain excess, subtract the amount from your 2025 Schedule J, line 7, from line 6 of your 2022
Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your 2022 Schedule D Tax Worksheet). If the result is more than
zero, that amount is your capital gain excess.
If you didn’t have a capital gain excess, complete the rest of either of those worksheets according to the worksheet’s instructions.
Then complete lines 5 and 6 above.
If you had a capital gain excess, complete a second 2022 Qualified Dividends and Capital Gain Tax Worksheet or 2022
Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications.
Then complete lines 5 and 6 above. These modifications are to be made only for purposes of filling out the 2022 Foreign Earned
Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2022 Qualified Dividends and Capital Gain
Tax Worksheet or line 9 of your 2022 Schedule D Tax Worksheet by your capital gain excess.
2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2022 Qualified Dividends and Capital Gain
Tax Worksheet or line 6 of your 2022 Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.
3. Reduce (but not below zero) the amount on your 2022 Schedule D (Form 1040), line 18, by your capital gain excess.
4. Include your capital gain excess as a loss on line 16 of your 2022 Unrecaptured Section 1250 Gain Worksheet in the 2022
Instructions for Schedule D (Form 1040).
6
DRAFT
DRAFT
4. Figure the tax on the amount on line 3. Use the 2022 Tax Rate Schedules, the 2022
Qualified Dividends and Capital Gain Tax Worksheet,* or the 2022 Schedule D Tax
Worksheet in the 2022 Schedule D instructions,* whichever applies . . . . . . . . . . . . . . . . . . . . . . 4.
5. Figure the tax on the amount on line 2c. Use the 2022 Tax Rate Schedules . . . . . . . . . . . . 5.
6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount
on your 2025 Schedule J, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
TREASURY/IRS AND OMB USE ONLY DRAFT
If you figured your tax for both 2023
and 2024 without using Schedule J, enter
on line 9 the taxable income from your
2023 tax return (or as previously adjusted
by the IRS, or corrected on an amended
return). But if that amount is zero or less,
complete the worksheet below to figure
the amount to enter on line 9.
Line 3. If you had an NOL for 2023, enter
the amount of that NOL from the 2023
Form 1045, Schedule A, line 24, you filed
with Form 1045 or Form 1040-X. If you
didn’t have an NOL for 2023, enter the
portion, if any, of the NOL carryovers and
carrybacks to 2023 that weren’t used in
2023 and were carried to years after 2023.
If you didn’t file a tax return for 2023,
use the amount you would have reported
as your taxable income had you been
required to file a tax return. Be sure to
keep all your records for 2023 until at least
3 years after April 15, 2026 (or the date
you file your 2025 tax return, if later).
Example. The farmer didn’t use
income averaging for 2022, 2023, or 2024.
The taxable income on the farmer’s 2023
Form 1040, line 15, is a negative $29,900.
The deduction for exemptions has been
suspended. The farmer subtracts from the
$29,900 loss the $0 deduction for the
suspended exemptions. The result is a
negative $29,900, the farmer’s 2023
taxable income, which the farmer enters
as a positive amount on line 1 of the 2023
Taxable Income Worksheet.
When the farmer filed their 2023 tax
return, the farmer had a $3,000 net capital
loss deduction on Schedule D, line 21
(which was also entered on Form 1040,
DRAFT
Instructions for 2023 Taxable
Income Worksheet
Line 2. Any net capital loss deduction on
your 2023 Schedule D, line 21, isn’t
allowed for income averaging purposes to
the extent it didn’t reduce your capital loss
carryover to 2024. This could happen if the
taxable income—shown on your 2023
2023 Taxable Income Worksheet—Line 9
line 7), and a $7,000 loss on Schedule D,
line 16 (as adjusted). The farmer also had
a $7,000 capital loss carryover to 2024.
The farmer adds the $3,000 from
Schedule D, line 21, and the $7,000
capital loss carryover. The farmer
subtracts from the $10,000 result the
$7,000 loss on the Schedule D, line 16,
and enters $3,000 on line 2 of the
worksheet.
The farmer enters $14,500 on line 3 of
the worksheet, the 2023 NOL from their
2023 Form 1045, Schedule A, line 24. Of
the $29,900 negative taxable income, the
$0 deduction for the suspended
exemptions, the $3,000 capital loss
deduction, and the farmer’s $12,400
standard deduction weren’t allowed in
figuring the NOL. The farmer had a
$14,500 loss on the 2023 Schedule F, the
only other item on the farmer’s 2023 tax
return.
The farmer enters $17,500 (the $3,000
line 2 amount plus the $14,500 line 3
amount) on line 4 and $12,400 (the
$29,900 line 1 amount minus the $17,500
line 4 amount) on line 5. The farmer enters
$12,400 as a negative amount on
Schedule J, line 9. The farmer enters
$6,000 on Schedule J, line 10, and a
negative $6,200 on Schedule J, line 11. If
the farmer uses Schedule J to figure their
tax for 2026, the farmer will enter the
negative $6,200 amount on their 2026
Schedule J as the farmer’s 2023 taxable
income for income averaging purposes.
Keep for Your Records
Complete this worksheet if you didn’t use Schedule J to figure your tax for 2024 and your 2023 taxable income was zero or
less. See the instructions above before completing this worksheet.
1. Figure the taxable income from your 2023 tax return (or as previously adjusted) without limiting it
to zero. If you had an NOL for 2023, don’t include any NOL carryovers or carrybacks to 2023.
Enter the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2023 Schedule D, line 21, add that loss (as a positive
amount) and your 2023 capital loss carryover to 2024. Subtract from that sum
the amount of the loss on your 2023 Schedule D, line 16, and enter the
result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
3. If you had an NOL for 2023, enter it as a positive amount. Otherwise, enter as
a positive amount the portion, if any, of the NOL carryovers and carrybacks to
2023 that weren’t used in 2023 and were carried to years after 2023 . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 9 . . . . . . . .
1.
4.
5.
7
DRAFT
If you used Schedule J to figure your tax
for:
• 2024 (that is, you entered the amount
from the 2024 Schedule J, line 23, on your
2024 Form 1040, Form 1040-SR, or Form
1040-NR, line 16; or 2024 Form 1040-X,
line 6), enter on line 9 the amount from
your 2024 Schedule J, line 15; or
• 2023 but not 2024, enter on line 9 the
amount from your 2023 Schedule J, line 3.
Form 1040, Form 1040-SR, or Form
1040-NR, line 15 (or as previously
adjusted)—was less than zero. Enter on
line 2 the amount by which your 2023
capital loss carryover to 2024 (the sum of
your short- and long-term capital loss
carryovers) exceeds the excess of the loss
on your 2023 Schedule D, line 16, over the
loss on your 2023 Schedule D, line 21. If
you had any NOL carrybacks to 2023, be
sure you refigured your 2023 capital loss
carryover to 2024.
Line 9
TREASURY/IRS AND OMB USE ONLY DRAFT
Line 12
If line 11 is zero or less, enter -0- on
line 12. Otherwise, figure the tax on the
amount on line 11 using:
• The 2023 Tax Rate Schedules below;
• The 2023 Qualified Dividends and
Capital Gain Tax Worksheet, later;
• The 2023 Schedule D Tax Worksheet in
the 2023 Schedule D instructions (but use
the 2023 Tax Rate Schedules below when
figuring the tax on the Schedule D Tax
Worksheet, lines 42 and 44); or
• The 2023 Foreign Earned Income Tax
Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2023
Schedule D Tax Worksheet to figure the
tax on the amount on line 11. However, if
you filed Form 2555 for 2023, you must
first complete the 2023 Foreign Earned
Income Tax Worksheet, and then use the
2023 Schedule D Tax Worksheet to figure
the tax on the amount on line 3 of the
Foreign Earned Income Tax Worksheet.
When completing the Schedule D Tax
Worksheet, you must allocate 1/3 of the
amount on Schedule J, line 2b, (and 1/3 of
the amount on line 2c, if any) to 2023. If for
2023 you had a capital loss that resulted in
a capital loss carryover to 2024, don’t
reduce the elected farm income allocated
to 2023 by any part of the carryover.
2023 Tax Rate Schedules—Line 12
Schedule Y-2—Use if your 2023 filing status was Married filing
separately.
Schedule X—Use if your 2023 filing status was Single.
But not
over—
$0
$11,000
11,000
44,725
44,725
95,375
95,375
Enter on
Schedule J,
line 12
...........
of the
amount
over—
But not
over—
$0
$1,100.00 +
12%
11,000
11,000
44,725
$1,100.00
5,147.00
+
22%
44,725
44,725
95,375
182,100
16,290.00 +
24%
95,375
182,100
231,250
37,104.00 +
32%
231,250
578,125
52,832.00 +
578,125
.............
174,238.25 +
If
Schedule
J, line 11,
is:
Over—
$0
+
12%
11,000
5,147.00
+
22%
44,725
95,375 182,100
16,290.00
+
24%
95,375
182,100
182,100 231,250
37,104.00
+
32%
182,100
35%
231,250
231,250 346,875
52,832.00
+
35%
231,250
37%
578,125
346,875
93,300.75
+
37%
346,875
But not
over—
$0
$22,000
22,000
89,450
89,450
...........
of the
amount
over—
..........
...........
of the
amount over
—
10%
Enter on
Schedule J,
line 12
$0 $11,000
Enter on
Schedule J,
line 12
10%
Schedule Y-1—Use if your 2023 filing status was Married
filing jointly or Qualifying widow(er).
8
If
Schedule J,
line 11, is:
Over—
Schedule Z—Use if your 2023 filing status was Head of household.
If
Schedule J,
line 11, is:
Over—
But not
over—
$0 $15,700
Enter on
Schedule J,
line 12
10%
$0
10%
$0
$2,200.00 +
12%
22,000
15,700
59,850
$1,570.00
+
12%
15,700
190,750
10,294.00 +
22%
89,450
59,850
95,350
6,868.00
+
22%
59,850
190,750
364,200
32,528.00 +
24%
190,750
95,350 182,100
14,678.00
+
24%
95,350
364,200
462,500
74,208.00 +
32%
364,200
182,100 231,250
35,498.00
+
32%
182,100
462,500
693,750
105,664.00 +
35%
462,500
231,250 578,100
51,226.00
+
35%
231,250
693,750
............
186,601.50 +
37%
693,750
578,100
172,623.50 +
37%
578,100
...........
...........
of the
amount over
—
DRAFT
DRAFT
If
Schedule
J, line 11,
is:
Over—
TREASURY/IRS AND OMB USE ONLY DRAFT
2023 Qualified Dividends and Capital Gain Tax Worksheet—Line 12
Keep for Your Records
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2025 Schedule J, line 2a, doesn’t include any net capital gain.
• You (a) entered qualified dividends on your 2023 Form 1040, 1040-SR, or 1040-NR, line 3a; (b) entered capital gain distributions
directly on your 2023 Form 1040, 1040-SR, or 1040-NR, line 7, and weren’t required to file Schedule D; or (c) filed Schedule D in 2023
and you answered “Yes” on lines 17 and 20 of that Schedule D.
1.
2.
3.
4.
5.
6.
7.
9.
10.
11.
12.
13.
14.
15.
Amount, if any, from your 2023 Form 4952, line 4g . . . . . . . . . 5.
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Enter one of the following three amounts depending on your
filing status.
• $44,625 if single or married filing separately.
. . . . . . . . . . . 8.
• $89,250 if married filing jointly or qualifying widow(er).
• $59,750 if head of household.
Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
DRAFT
DRAFT
8.
Amount from your 2025 Schedule J, line 11. If for 2023 you filed Form 2555, enter the
amount from line 3 of the 2023 Foreign Earned Income Tax Worksheet . . . . . . . . . . 1.
Amount from your 2023 Form 1040, 1040-SR, or 1040-NR,
line 3a* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2023?*
Enter the smaller of line 15 or 16 of your
Yes. 2023 Schedule D, but don’t enter less
than -0-.
. . . . . 3.
Enter the amount from your 2023 Form
No. 1040, 1040-SR, or 1040-NR, line 7.
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . 11.
Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
16.
Enter one of the following amounts depending on your filing status.
• $492,300 if single.
. . . . . . . . . . . 15.
• $276,900 if married filing separately.
• $553,850 if married filing jointly or qualifying widow(er).
• $523,050 if head of household.
Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
17.
Add lines 7 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18.
Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . 18.
19.
Enter the smaller of line 14 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
20.
Multiply line 19 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
21.
Add lines 11 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
22.
Subtract line 21 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
23.
Multiply line 22 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
24.
Figure the tax on the amount on line 7. Use the 2023 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 24.
25.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
26.
Figure the tax on the amount on line 1. Use the 2023 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 26.
27.
Tax. Enter the smaller of line 25 or line 26 here and on your 2025 Schedule J, line 12. If for 2023 you filed
Form 2555, don’t enter this amount on Schedule J, line 12. Instead, enter it on line 4 of the 2023 Foreign
Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
* If for 2023 you filed Form 2555, see the footnote in the 2023 Foreign Earned Income Tax Worksheet before completing this line.
9
TREASURY/IRS AND OMB USE ONLY DRAFT
2023 Foreign Earned Income Tax Worksheet—Line 12
Keep for Your Records
Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2023 Form 1040
or 1040-SR using Form 2555. However, if Schedule J, line 11, is zero or less, don’t complete this worksheet.
1.
2a.
b.
c.
3.
4.
5.
6.
* Enter the amount from line 3 above on line 1 of the 2023 Qualified Dividends and Capital Gain Tax Worksheet or the 2023
Schedule D Tax Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that
worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain
excess. To find out if you had a capital gain excess, subtract the amount from your 2025 Schedule J, line 11, from line 6 of your 2023
Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your 2023 Schedule D Tax Worksheet). If the result is more than
zero, that amount is your capital gain excess.
If you didn’t have a capital gain excess, complete the rest of either of those worksheets according to the worksheet’s instructions.
Then complete lines 5 and 6 above.
If you had a capital gain excess, complete a second 2023 Qualified Dividends and Capital Gain Tax Worksheet or 2023
Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications.
Then complete lines 5 and 6 above. These modifications are to be made only for purposes of filling out the 2023 Foreign Earned
Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2023 Qualified Dividends and Capital Gain
Tax Worksheet or line 9 of your 2023 Schedule D Tax Worksheet by your capital gain excess.
2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2023 Qualified Dividends and Capital Gain
Tax Worksheet or line 6 of your 2023 Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.
3. Reduce (but not below zero) the amount on your 2023 Schedule D (Form 1040), line 18, by your capital gain excess.
4. Include your capital gain excess as a loss on line 16 of your 2023 Unrecaptured Section 1250 Gain Worksheet in the 2023
Instructions for Schedule D (Form 1040).
10
DRAFT
DRAFT
1. Enter the amount from your 2025 Schedule J, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a. Enter the amount from your (and your spouse’s, if filing jointly) 2023 Form 2555, lines 45 and
50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2023
because they were related to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c. Subtract line 2b from line 2a. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Add lines 1 and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Figure the tax on the amount on line 3. Use the 2023 Tax Rate Schedules, the 2023
Qualified Dividends and Capital Gain Tax Worksheet,* or the 2023 Schedule D Tax
Worksheet in the 2023 Schedule D instructions,* whichever applies . . . . . . . . . . . . . . . . . . . . . .
5. Figure the tax on the amount on line 2c. Use the 2023 Tax Rate Schedules . . . . . . . . . . . .
6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount
on your 2025 Schedule J, line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TREASURY/IRS AND OMB USE ONLY DRAFT
Line 13
If you used Schedule J to figure your tax
for 2024 (that is, you entered the amount
from the 2024 Schedule J, line 23, on your
2024 Form 1040, 1040-SR, or 1040-NR,
line 16; or on Form 1040-X, line 6, for
2024), enter on line 13 the amount from
your 2024 Schedule J, line 3.
If you didn’t use Schedule J to figure
your tax for 2024, enter on line 13 the
taxable income from your 2024 tax return
(or as previously adjusted by the IRS, or
corrected on an amended return). But if
that amount is zero or less, complete the
worksheet below to figure the amount to
enter on line 13.
Instructions for 2024 Taxable
Income Worksheet
Line 2. Any net capital loss deduction on
your 2024 Schedule D, line 21, isn’t
allowed for income averaging purposes to
the extent it didn’t reduce your capital loss
carryover to 2025. This could happen if the
taxable income—shown on your 2024
Form 1040, 1040-SR, or 1040-NR, line 15
(or as previously adjusted)—would have
been less than zero if you could have
Line 3. If you had an NOL for 2024, enter
the amount of that NOL from the 2024
Form 1045, Schedule A, line 24, you filed
with Form 1045 or Form 1040-X. If you
didn’t have an NOL for 2024, enter the
portion, if any, of the NOL carryovers and
carrybacks to 2024 that weren’t used in
2024 and were carried to years after 2024.
Example. The farmer didn’t use
income averaging for 2022, 2023, or 2024.
The taxable income on the farmer’s 2024
Form 1040, line 15, would have been a
negative $1,000 if the farmer could have
entered a negative number on that line.
This amount includes an NOL deduction
on the farmer’s 2024 Schedule 1 (Form
1040), line 8a, of $5,150. The $5,150 is
the portion of the 2023 NOL that was
remaining from 2022 to be carried to 2024.
See the examples earlier. The farmer’s
taxable income is limited to zero and the
farmer doesn’t have an NOL for 2024. The
result is a negative $1,000, the farmer’s
2024 taxable income, which the farmer
enters as a positive amount on line 1 of
the 2024 Taxable Income Worksheet.
When the farmer filed the 2024 tax
return, the farmer had a $3,000 net capital
loss deduction on Schedule D, line 21
2024 Taxable Income Worksheet—Line 13
(which was also entered on Form 1040,
line 7); a $7,000 loss on Schedule D,
line 16; and a $5,000 capital loss
carryover to 2025 (the farmer’s 2024
capital loss carryover to 2025 was $5,000,
not $4,000, because the amount on the
Form 1040, line 15, would have been a
negative $1,000 if the farmer could have
entered a negative number on that line).
The farmer adds the $3,000 from
Schedule D, line 21, and the $5,000
carryover. The farmer subtracts from the
$8,000 result the $7,000 loss on the
Schedule D, line 16, and enters $1,000 on
line 2 of the worksheet.
The farmer enters -0- on line 3 of the
worksheet because the farmer doesn’t
have an NOL for 2024 and didn’t have an
NOL carryover from 2024 available to
carry to 2025 and later years. The NOL
deduction for 2024 of $5,150 was reduced
to zero because it didn’t exceed the
farmer’s modified taxable income of
$7,150. Modified taxable income is figured
by adding back the $3,000 net capital loss
deduction to taxable income (figured
without regard to the NOL deduction) of
$4,150. The farmer enters $1,000 on line 4
and $0 on line 5 of the worksheet. The
farmer enters $0 on Schedule J, line 13.
The farmer enters $6,000 on Schedule J,
line 14, and $6,000 on Schedule J, line 15.
If the farmer uses Schedule J to figure the
farmer’s tax for 2026, the farmer will enter
$6,000 on the farmer’s 2026 Schedule J
as the 2024 taxable income for income
averaging purposes.
Keep for Your Records
Complete this worksheet if your 2024 taxable income was zero or less. See the instructions above before completing this
worksheet.
1. Figure the taxable income from your 2024 tax return (or as previously adjusted) without limiting it
to zero. If you had an NOL for 2024, don’t include any NOL carryovers or carrybacks to 2024.
Enter the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2024 Schedule D, line 21, add that loss (as a positive
amount) and your 2024 capital loss carryover to 2025. Subtract from that sum
the amount of the loss on your 2024 Schedule D, line 16, and enter the
result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
3. If you had an NOL for 2024, enter it as a positive amount. Otherwise, enter as
a positive amount the portion, if any, of the NOL carryovers and carrybacks to
2024 that weren’t used in 2024 and were carried to years after 2024 . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 13 . . . . . .
1.
4.
5.
11
DRAFT
DRAFT
If you didn’t file a tax return for 2024,
use the amount you would have reported
as your taxable income had you been
required to file a tax return. Be sure to
keep all your records for 2024 until at least
3 years after April 15, 2026 (or the date
you file your 2025 tax return, if later).
entered a negative amount on that line.
Enter on line 2 the amount by which your
2024 capital loss carryover to 2024 (the
sum of your short- and long-term capital
loss carryovers) exceeds the excess of the
loss on your 2024 Schedule D, line 16,
over the loss on your 2024 Schedule D,
line 21.
TREASURY/IRS AND OMB USE ONLY DRAFT
Line 16
If line 15 is zero or less, enter -0- on
line 16. Otherwise, figure the tax on the
amount on line 15 using:
• The 2024 Tax Rate Schedules below;
• The 2024 Qualified Dividends and
Capital Gain Tax Worksheet, later;
• The 2024 Schedule D Tax Worksheet in
the 2024 Schedule D instructions (but use
the 2024 Tax Rate Schedules when
figuring the tax on the Schedule D Tax
Worksheet, lines 44 and 46); or
• The 2024 Foreign Earned Income Tax
Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2024
Schedule D Tax Worksheet to figure the
tax on the amount on line 15. However, if
you filed Form 2555 for 2024, you must
first complete the 2024 Foreign Earned
Income Tax Worksheet and then use the
2024 Schedule D Tax Worksheet to figure
the tax on the amount on line 3 of the
Foreign Earned Income Tax Worksheet.
When completing the Schedule D Tax
Worksheet, you must allocate 1/3 of the
amount on Schedule J, line 2b, (and 1/3 of
the amount on line 2c, if any) to 2024. If for
2024 you had a capital loss that resulted in
a capital loss carryover to 2025, don’t
reduce the elected farm income allocated
to 2024 by any part of the carryover.
2024 Tax Rate Schedules—Line 16
Schedule Y-2—Use if your 2024 filing status was Married filing
separately.
Schedule X—Use if your 2024 filing status was Single.
But not
over—
Enter on
Schedule J,
line 16
$0
11,600
...........
11,600
47,150
$1,160.00
47,150 100,525
of the
amount
over—
10%
$0
+
12%
11,600
11,600
5,426.00
+
22%
47,150
47,150 100,525
100,525 191,950
17,168.50
+
24%
100,525
191,950 243,725
39,110.50
+
32%
243,725 609,350
55,678.50
+
609,350 .............
183,647.25 +
If
Schedule
J, line 15,
is:
Over—
$1,160.00 +
12%
11,600
5,426.00
+
22%
47,150
100,525 191,950
17,168.50 +
24%
100,525
191,950
191,950 243,725
39,110.50 +
32%
191,950
35%
243,725
243,725 365,600
55,678.50 +
35%
243,725
37%
609,350
365,600
98,334.75 +
37%
365,600
But not
over—
$0 $23,200
23,200
...........
of the
amount
over—
10%
$0
47,150
..........
...........
of the amount
over—
$0
Enter on
Schedule J,
line 16
$0 $11,600
Enter on
Schedule J,
line 16
10%
Schedule Y-1—Use if your 2024 filing status was Married
filing jointly or Qualifying surviving spouse.
12
If
Schedule J
, line 15, is:
Over—
But not
over—
Schedule Z—Use if your 2024 filing status was Head of household.
If
Schedule J
, line 15, is:
Over—
But not
over—
$0 $16,550
63,100
Enter on
Schedule J,
line 16
...........
of the amount
over—
10%
$0
$1,655.00 +
12%
16,550
7,241.00
+
22%
63,100
94,300
$2,320.00
+
12%
23,200
16,550
94,300 201,050
10,852.00
+
22%
94,300
63,100 100,500
201,050 383,900
34,337.00
+
24%
201,050
100,500 191,950
15,469.00 +
24%
100,500
383,900 487,450
78,221.00
+
32%
383,900
191,950 243,700
37,417.00 +
32%
191,950
487,450 731,200
111,357.00 +
35%
487,450
243,700 609,350
53,977.00 +
35%
243,700
731,200 ............
196,669.50 +
37%
731,200
609,350
181,954.50 +
37%
609,350
...........
DRAFT
DRAFT
If
Schedule
J, line 15,
is:
Over—
TREASURY/IRS AND OMB USE ONLY DRAFT
2024 Qualified Dividends and Capital Gain Tax Worksheet—Line 16
Keep for Your Records
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2025 Schedule J, line 2a, doesn’t include any net capital gain.
• You (a) entered qualified dividends on your 2024 Form 1040, 1040-SR, or 1040-NR, line 3a; (b) entered capital gain distributions
directly on your 2024 Form 1040, 1040-SR, or 1040-NR, line 7, and weren’t required to file Schedule D; or (c) filed Schedule D in 2024
and you answered “Yes” on lines 17 and 20 of that Schedule D.
1.
2.
3.
4.
5.
6.
7.
9.
10.
11.
12.
13.
14.
15.
Amount, if any, from your 2024 Form 4952, line 4g . . . . . . . . . . . 5.
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Enter one of the following three amounts depending on your
filing status.
• $47,025 if single or married filing separately.
. . . . . . . . . . 8.
• $94,050 if married filing jointly or qualifying surviving spouse.
• $63,000 if head of household.
Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
DRAFT
DRAFT
8.
Amount from your 2025 Schedule J, line 15. If for 2024 you filed Form 2555, enter the
amount from line 3 of the 2024 Foreign Earned Income Tax Worksheet . . . . . . . . . . . 1.
Amount from your 2024 Form 1040, 1040-SR, or 1040-NR,
line 3a* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2024?*
Enter the smaller of line 15 or 16 of your 2024
Yes. Schedule D, but don’t enter less than -0-.
. . . . . 3.
Enter the amount from your 2024 Form 1040,
No. 1040-SR, or 1040-NR, line 7.
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . 11.
Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
16.
Enter one of the following amounts depending on your filing status.
• $518,900 if single.
. . . . . . . . . . 15.
• $291,850 if married filing separately.
• $583,750 if married filing jointly or qualifying surviving spouse.
• $551,350 if head of household.
Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
17.
Add lines 7 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18.
Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19.
Enter the smaller of line 14 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
20.
Multiply line 19 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
21.
Add lines 11 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
22.
Subtract line 21 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
23.
Multiply line 22 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
24.
Figure the tax on the amount on line 7. Use the 2024 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
25.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
26.
Figure the tax on the amount on line 1. Use the 2024 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
27.
Tax. Enter the smaller of line 25 or line 26 here and on your 2025 Schedule J, line 16. If for 2024 you filed
Form 2555, don’t enter this amount on Schedule J, line 16. Instead, enter it on line 4 of the 2024 Foreign
Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
* If for 2024 you filed Form 2555, see the footnote in the 2024 Foreign Earned Income Tax Worksheet before completing this line.
13
TREASURY/IRS AND OMB USE ONLY DRAFT
2024 Foreign Earned Income Tax Worksheet—Line 16
Keep for Your Records
Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2024 Form 1040
or 1040-SR using Form 2555. However, if Schedule J, line 15, is zero or less, don’t complete this worksheet.
1.
2a.
b.
c.
3.
4.
5.
6.
* Enter the amount from line 3 above on line 1 of the 2024 Qualified Dividends and Capital Gain Tax Worksheet or the 2024
Schedule D Tax Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that
worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain
excess. To find out if you had a capital gain excess, subtract the amount from your 2025 Schedule J, line 15, from line 6 of your 2024
Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your 2024 Schedule D Tax Worksheet). If the result is more than
zero, that amount is your capital gain excess.
If you didn’t have a capital gain excess, complete the rest of either of those worksheets according to the worksheet’s instructions.
Then complete lines 5 and 6 above.
If you had a capital gain excess, complete a second 2024 Qualified Dividends and Capital Gain Tax Worksheet or 2024
Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications.
Then complete lines 5 and 6 above. These modifications are to be made only for purposes of filling out the 2024 Foreign Earned
Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2024 Qualified Dividends and Capital Gain
Tax Worksheet or line 9 of your 2024 Schedule D Tax Worksheet by your capital gain excess.
2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2024 Qualified Dividends and Capital Gain
Tax Worksheet or line 6 of your 2024 Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.
3. Reduce (but not below zero) the amount on your 2024 Schedule D (Form 1040), line 18, by your capital gain excess.
4. Include your capital gain excess as a loss on line 16 of your 2024 Unrecaptured Section 1250 Gain Worksheet in the 2024
Instructions for Schedule D (Form 1040).
Lines 19, 20, and 21
For example, your “tax” line may, in
addition to the tax imposed by section 1,
include amounts from Form 8814 or 4972;
14
amounts from the recapture of an
education credit; or a repayment amount
for any excess of advance monthly
payments of the health coverage tax
credit.
If you amended your return or the IRS
made changes to it, make sure you enter
the corrected amount.
DRAFT
DRAFT
1. Enter the amount from your 2025 Schedule J, line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a. Enter the amount from your (and your spouse’s, if filing jointly) 2024 Form 2555, lines 45 and
50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2024
because they were related to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c. Subtract line 2b from line 2a. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Add lines 1 and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Figure the tax on the amount on line 3. Use the 2024 Tax Rate Schedules, the 2024
Qualified Dividends and Capital Gain Tax Worksheet,* or the 2024 Schedule D Tax
Worksheet in the 2024 Schedule D instructions,* whichever applies . . . . . . . . . . . . . . . . . . . . . .
5. Figure the tax on the amount on line 2c. Use the 2024 Tax Rate Schedules . . . . . . . . . . . .
6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount
on your 2025 Schedule J, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
| File Type | application/pdf |
| File Title | 2025 Instructions for Schedule J (Form 1040) |
| Subject | Instructions for Schedule J (Form 1040), Income Averaging for Individuals With Income from Farming or Fishing |
| Author | W:CAR:MP:FP |
| File Modified | 2025-11-26 |
| File Created | 2025-11-19 |